Company retirement plans


Most employers offer some sort of retirement savings options such as pension plans, four-oh-one-kay programs, and profit-sharing. These options may offer special tax advantages and contribution matching assets. Traditional pension plans are becoming more rare because they are expensive to fund and administer. If you are fortunate enough to work for a company that provides a pension plan, the plan can provide from ten to forty percent of your total retirement income. The amount you receive depends on how many years you worked for your employer and your salary in your final few years at the company. In a four-oh-one-kay, or salary reduction plan, your employer deducts a percentage of your salary, according to your wishes, before it is taxed at the federal, state, or local level. As a result, the annual earnings you report to the IRS are lessened by the amount of your four-oh-one-kay contribution. The money set aside in your plan account is invested and all investment earnings are tax deferred. If your company offers a profit-sharing plan, it allows you to contribute up to thirteen point oh four percent of your earnings, up to thirty thousand dollars a year. However, you can contribute the full amount one year and nothing the next depending on how your business does. For more information on employer retirement plans, contact your employer or a financial planning professional.

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